Forecast: Increased tax receipts will give lawmakers more to spend in 2013-14

$1.28 billion more to spend

The state will have more cash to spend for its next two-year budget — on top of the surplus built by Gov. Mitch Daniels' administration — but at least some of the new money will be eaten up by increasing Medicaid costs.

A new revenue forecast predicts state government will receive $27.9 billion in the next two-year budget cycle. That's about $1.28 billion more from taxes and other sources in 2013 and 2014 than the state took in during the previous two years.

And already, the state is spending about $362 million less than it's taking in and has more than $2 billion in the bank.

New House Ways and Means Chairman Tim Brown, R-Crawfordsville, said the numbers mean lawmakers can look at

boosting funding for programs that have suffered cuts in recent years when money was tighter.

The forecast indicates "Hoosiers are going back to work and that people are buying stuff in stores and wanting to spend their money," Brown said.

But budget leaders did not say whether they believed the new money would be enough to persuade them to fund Gov.-elect Mike Pence's plan to cut income taxes by 10 percent, which would eventually reduce annual revenue by roughly $500 million. Brown said lawmakers will have "to decide where the priorities are."

Senate Appropriations Chairman Luke Kenley, R-Noblesville, expressed caution Monday about the projections, which were prepared by a bipartisan committee of fiscal experts. That's in part because congressional action — or inaction — on pressing federal tax and budget issues could affect the national economy.

"I'm a little skeptical," Kenley said. "I'm not sure I think it's going to work this way."

Kenley said the GOP-controlled General Assembly won't be able to settle on a budget plan — including decisions about education funding and Pence's tax cut plan — they receive an updated forecast in April, which will come about two weeks before lawmakers are scheduled to adjourn. He said that will give lawmakers "a lot better picture."

Legislative fiscal leaders said they were also uncertain about Medicaid projections, which showed costs in that program are increasingly significantly. The state will have to budget about $300 million more during the next two years to cover those costs — or make changes in the health care program.

"I think it's an accurate forecast of the need, but the question is: Can we do any programmatic changes?" Brown said. "We've asked the department to think about cost saving measurements, but we have no specifics going forward."